10 Dec 2013
Analyst predicts $7.4BN market by 2017 and an increased focus on research and development.
China’s fast-growing market for LED lighting will more than double in value to be worth $7.4 billion in 2017, according a new market study.
Analysts at Lux Research believe that a virtuous cycle of falling prices, policy support and energy conservation goals will swell the share of China’s lighting met by solid-state technology to nearly 20 per cent by then.
“China’s ongoing urbanization and its slowly rising population continue to drive demand for new buildings and infrastructure,” they report, with the associated need for lighting in general.
But LED lighting is positioned to benefit the most from this need. “Through rapid unit price reduction, consistent and supportive government policies, and China’s energy conservation targets, China’s LED lighting market will grow from $3.12 billion in 2013 to $7.36 billion in 2017,” predicts Lux.
That would equate to a compound annual growth rate of nearly 24 per cent, far outstripping the 5.6 per cent expansion of the wider Chinese lighting market.
Lead author of the report Jerrold Wang believes that the next four years will see residential applications become a significant chunk of the market for the first time, with annual sales of just $23 million this year swelling to $310 million within five years.
That will be prompted by a continued steep decline in the selling prices of fixtures, which are set to fall from an average of $6.02 in 2013 to just $3.13 in 2017.
Residential growth will be augmented by steadily rising adoption in commercial and industrial segments that have already taken root in the country, for example in municipal streets and tunnels, where spending is driven by both the federal and local governments.
Massive consolidation coming
But while demand is set to expand rapidly, a long overdue change in the LED industry landscape is now imminent. Wang predicts consolidation of manufacturers operating in what remains a very crowded sector comprising more than 5000 players, and one in which the top ten companies command less than one-fifth of the overall market.
An increased focus on research and development is also anticipated as the major players seek to outdo their rivals, while the Lux team believes that industry consolidation over the next five years will eliminate suppliers of poor-quality products.
Wang also points out that different provinces in China have very different potential because of varying energy-saving targets, utility prices, availability of building floor space and income per capita. “Those hoping to leverage the China market for growth will need to pick their technologies, applications, markets, and partners carefully,” he writes.
For example, Guangdong, Shanghai, Zhejiang, and Jiangsu are emerging as “premium” markets for LED adoption. Guangdong is seen as offering the best overall combination, driven by the largest availability of new and existing building floor space in 2015.
Wang added: “LED lighting has changed from expensive products outside the cost-conscious sweet-spot of Chinese buyers to value-adding solutions, gaining market share and realizing sustainable growth.”
• The Lux Research report Running to the Light: Sizing China's LED Lighting Market is available via the analyst company's web site.